FSU Pres lays out plan to deal with deficit

In a lengthy internal e-mail sent to Florida State University faculty and staff last week, FSU President Eric Barron spelled out how the school plans to address its massive deficit -- tallied at $18.4 million for next year. That's after a recently approved 15-percent tuition increase kicks in $13.4 million.

Barron said his priorities are maintaining quality, student-faculty ratios and enrollment rates. He also said he wants to give FSU employees 3-percent raises, which come at a good time now that the Legislature requires public employees to contribute 3 percent of their salaries to their retirement. (Read about the University of South Florida and University of Florida's responses to that mandate.)

To help pay for those salary bumps and fill the rest of the gaping hole, FSU's athletic association will give $1 million annually to academics and FSU's provost office will contribute $10 million of its budget. That'll restrict nearly all flexibility for the provost's office, but it'll also insulate the school's academic units from recurring cuts.

Barron also wants to revamp the school's financial aid model to reserve aid money next year to serve the neediest students first, rather than the current practice that he describes as "first-come, first-served." He also floated using revenue from FSU license tag sales to help supplement that aid.

Read the full text of the e-mail below:

Dear Friends:

As you no doubt have heard, the Florida Legislature passed a State budget that reduces our University allocation by 17.2 million dollars. In total, Florida State University has now lost more than $104M since 2007.

During the last month, your Vice Presidents, the Deans, the Budget Crisis Committee and our Board of Trustees have been discussing how to address this shortfall. I would like to take a moment to lay out our strategy for dealing with the loss of State appropriation. I apologize for the length of this communication, but it is important for all of us to understand how to move forward.

First, we established a set of objectives to re-balance the FSU budget. To maintain the strengths of FSU, we must: - Preserve the quality of an FSU education - Preserve student/faculty ratios - Preserve student services that impact retention and graduation rates - Preserve enrollment to maintain student credit hour funding, and - Complete the promise to make last year's bonus permanent in order to recognize and reward the efforts of our faculty and staff

The challenge of reaching these objectives is a significant one. FSU is still in the process of recovering from the previous budget cuts, and our budget carries forward a deficit of $14.6M from last year. nbsp;The additional cut of $17.2M brings our recurring deficit to $31.8M. On June 23, the Board of Governors approved our request to increase tuition by 7%, which with the 8% increase authorized by the Legislature yields a total increase of 15%, the maximum allowable by Florida law. This will generate $13.4M that we can utilize to reduce our deficit, still leaving $18.4M as our deficit.

Despite this deficit, my belief is that the hard-working employees of this institution cannot go another year without a permanent increase in salaries. I propose the following increments (excluding Athletics, which will have a separate proposal). I propose to set aside a 3% salary increase for all eligible FSU employees. This will fulfill my pledge to make permanent the 3% bonus that was provided to employees last year. Our Board of Trustees agrees with this plan but has also encouraged me to find funds to provide merit increases for our most productive employees. I intend to propose this merit increase as a one-time bonus, and again, to work hard to make permanent merit increases a part of the FSU salary philosophy in the future. I propose that faculty with meritorious productivity in the top 25% of their departments or colleges receive a non-recurring bonus of $2000, and faculty in the next 25% receive a non-recurring bonus of $1000. For staff, meritorious productivity at the top 25% and at the next 25% would be rewarded with one-time bonuses of 2% and 1% of their salaries, respectively. The minimum meritorious bonus for staff in the top 50% would be $500. Of course, these proposals must go to the relevant unions that govern collective bargaining before any raise or bonus can be implemented.

With the proposed salary increase, our budget problem grows to $25.4M. Over the last month, I have been working with all of the University Vice Presidents to address this problem. We believe that we can allocate $13M within our budgets, without impacting faculty and staff. The Office of the Provost will contribute $10M. Unfortunately, this will remove almost all flexibility in the Provost's office for permanent expenditures, but Interim Provost Bradley and incoming Provost Stokes agree that maintaining our faculty and staff is our highest priority. As a consequence, no recurring cuts are planned for our academic units. I am personally indebted to the Provost and all of the VPs for their efforts to scrub their budgets to find as many recurring dollars as possible so we can keep faculty and staff intact.

I am also pleased to say that University Athletics, either through its budget or changes in future ticket prices, will contribute $1M annually to maintaining academic programs. This is a significant statement of support from Athletics - we cannot preserve greatness if we don't all pitch in to ensure that we maintain this fine institution.

I am also proposing that we restructure financial aid. We intend to move to a "neediest student first" model to cover unmet needs, rather than a "first-come, first-served" model. If necessary we will also transfer license plate revenue (currently used for other purposes) to meet the additional needs of economically-disadvantaged students. By covering all the tuition and fees of our Pell-eligible, need-based students, the law now allows FSU to use the differential tuition increase to maintain our faculty numbers (previously 30% of the increase went to need-based aid). We believe that this change in approach will allow us to use $3.7M in revenue to help maintain our faculty and staff. No changes in aid packages will occur this year, so this revenue will not be realized until next year. We will use this year to ensure to study all financial aid allocations so that our students will continue to be well-supported.

Even with all of these proposals, we will have a $7.7M recurring deficit at the end of the fiscal year that starts July 1, 2012. My belief is that we can use temporary funds to fill this gap for one year and then again address this gap in the following year's budget. On the one hand, this is a smaller deficit than we are carrying forward this year. On the other hand, there is risk in this approach, because it means that a significant portion of next year's proposed tuition increase will go toward filling the gap if the Legislature doesn't increase our appropriation (and we may not have seen the end of budget cuts).

Importantly, this budget preserves our commitment to students and to a quality FSU education by preserving student services, maintaining our student/faculty ratios and demonstrating our commitment to a hard-working faculty and staff.

As always, I welcome your comments and concerns. This email comes from my personal account, and any response you provide will come directly to me.

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Gradebook features education articles and insights on schools in Florida, focusing on Tampa Bay area schools. What's the latest from the Florida Department of Education? How is the FCAT being used to compare Florida schools? What's going on in Tampa Bay schools? Get an insider's view from the Times education reporting team.